Lords Sitting of 19 July 1954

Preamble
The House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers
The Earl of Shannon—Sat first in Parliament after the death of his brother.

RAW COTTON COMMISSION (DISSOLUTION) DRAFT ORDER, 1954
2.35 p.m.
THE CHANCELLOR OF THE DUCHY OF LANCASTER (VISCOUNT WOOLTON)THE CHANCELLOR OF THE DUCHY OF LANCASTER (VISCOUNT WOOLTON) rose to move, That the Raw Cotton Commission (Dissolution) Draft Order, 1954, reported from the Special Orders Committee on the 23rd of June last, be approved. The noble Viscount said: I beg to move that this Order be approved. Subsection (1) of Section 4 of the Cotton Act, 1954, empowers the Board of Trade and myself to provide jointly by Order for the winding up and dissolution of the Raw Cotton Commission if at any time we are satisfied that it is in the public interest to do so. As long ago as November 4 of last year, in the debate on the gracious Speech, I intimated that the Government's aim was that the Raw Cotton Commission should cease their active operations at the end of August, 1954. Nevertheless, I made it clear during the Second Reading of the Cotton Bill, in response to observations that had been made by the Opposition, that when the time came to make the requisite Order we should have to consider whether any fresh circumstances had arisen of sufficient gravity to make us feel that the public interest required some postponement. Such consideration has been given, and I am glad to say that, in our opinion, no postponement is necessary.
On the contrary, a number of new factors have combined to strengthen the belief that our original intention was correct and justified. There is every indication that the arrangements for the private purchase of cotton are functioning satisfactorily and that those spinners who have been buying their own cotton
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this season have been able to do so without difficulty. In particular, the fears expressed some months ago about a prospective shortage this season of long staple cotton, which was advanced as a reason for possibly retaining the Raw Cotton Commission in being, have, I am happy to say, proved to be unfounded. On May 18, the Liverpool Futures Market reopened and, as your Lordships will have observed if you have read the Press accounts, it is steadily absorbing the cover that has hitherto been placed with the Raw Cotton Commission's cover scheme. This means that the taxpayer is being relieved of the burden of covering the cotton trade against the fluctuations in price of its raw material. Last March there was a considerable fear that the United States might introduce an export subsidy on raw cotton. This fear has been removed by the recent announcement by the Secretary of Agriculture in the United States that there would be no such subsidy in the season 1954–55.
Finally, in the general sphere, the impact of the American economy on the rest of the world has been less severe than was feared in some quarters a few months ago, when we were last discussing this subject of cotton. My Lords, in view of all these circumstances, we have decided that it would be right to proceed with our intention of winding up the Raw Cotton Commission from August 31. We think this would be in the public interest. I must observe that since I last spoke the accounts of the Commission for the year 1952–53 have been published. They show that there has been a loss of £22,400,000. Therefore, we have no hesitation in recommending this Order.
I think I ought to talk for a few moments, if your Lordships will bear with me, on the subject of stocks, because during the Committee stage of the Cotton Bill I outlined arrangements by which the Raw Cotton Commission were to ensure continuity of supplies for their customers during the transitional period between August 31 and the arrival of the various new crops which they could purchase for themselves in the season 1954–55. In accordance with these arrangements, the Commission, apart from continuing to supply their immediate needs, have given contracting-in spinners an opportunity to enter into firm contracts for the purchase of cotton for delivery

1133
after August 31. The Commission estimate that by that date they will have sold some 230,000 bales of cotton for delivery between the end of August this year and May of next year. In addition to this, the Commission estimate that at August 31 they will hold approximately a similar quantity of unsold stocks, valued at about £20 million, the equivalent of six weeks' consumption. These stocks will comprise cottons of all sorts, including some for which there may be only a limited market. Their disposal will be one of the main tasks of the liquidator under the arrangements to be approved by the responsible Minister after consultation with the Treasury.
Article 5 (b) of the Order lays down that this disposal shall be effected in the way
"best calculated to serve the public interest in all respects, due regard being had to the price obtaining for comparable cotton in the open market."
It was not possible to include a more precise provision than this, but as I indicated earlier, one-half of the total stock has already been sold forward. I am glad to say that the Cotton Import Advisory Panel, a body on which all interests in the trade—merchants, spinners and members of the union—are represented, and which has given Ministers valuable advice during the last two years, has agreed to continue to advise during the liquidation period on the method of liquidation. I think the fact that these gentlemen are prepared to continue to serve will meet with the gratitude, as well as the approval, of your Lordships' House. I am sure the House will agree that in this way the interests of both the Exchequer and the trade should be well protected.
The total stocks of cotton in this country at the end of May, the latest date for which complete figures are available, amounted to 910,000 bales, which is equivalent to about five and a half months' consumption by the whole spinning industry. My object in drawing the attention of your Lordships to these figures arises from the discussion that took place on the Cotton Bill, when, the noble Lord, Lord Lucas of Chilworth, will remember, some apprehension was felt as to whether the stocks would be sufficient. I also want to make it quite clear that adequate arrangements have been made to protect the interests of contracting-in
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spinners until they can buy freely on the open market.
When we were discussing the Cotton Bill, your Lordships were interested in the subject of Colonial contracts, and what was to happen to the long-term contracts for the supply of raw cotton which the Raw Cotton Commission had made with certain Colonial Territories. There are three of these contracts, with Nigeria, with Aden and with Nyasaland, and both the President of the Board of Trade and gave assurances—he in another place—that these contracts would be implemented in full, if that was the wish of the Colonies concerned. The position is that discussions with the Colonies concerning their wishes in the matter are, in fact, still going on. It is a question of considerable importance to them, and naturally they do not want to make any hurried decision. But meanwhile, in case they decide that they would like the contracts to run for their full term, we have included a provision in Article 3 of the Order to the effect that the liquidator will carry them out, subject to the direction of the Minister of Materials, or his successor in function. I should point out that, should Parliament agree to the proposed dissolution of the Ministry of Materials, the contracts will then obviously go to the Board of Trade.
From the passage of the Act in May all spinners have been free to buy where they would, except dollar cotton. From the same date they were given freedom to buy dollar cotton for delivery after September 1. This will give the industry the chance to buy their material in the cheapest sources, and will improve their competitive powers. It may mean some increase in dollar expenditure, the extent of which, of course, will depend upon the relative prices of other cottons; but in our view, arty such increase will be of quite manageable proportions. I beg to move.
Moved, That the Raw Cotton Commission (Dissolution) Draft Order, 1954, reported from the Special Orders Committee on the 23rd of June last, be approved.—(Viscount Woolton.)
2.47 p.m.
LORD LUCAS OF CHILWORTH: My Lords, I am sure that all your Lordships are grateful to the noble Viscount, not only for the manner in which he has presented his Order, but also for—if I

1135
may so call it—the progress report he has made. It was most interesting. I do not intend to repeat my Second Reading or Third Reading speech upon the Cotton Bill, but there are one or two questions which I should like to address to the noble Viscount, purely for the purpose of clarification. He has said, quite correctly, that the Act under which this Dissolution Order is presented to your Lordships gave the Board of Trade and the Minister of Materials power to dissolve the Raw Cotton Commission at their option, if they thought it was in the national interests so to do. The noble Viscount has said that, in their opinion, no factors have arisen to contradict that it is in the national interests that this Raw Cotton Commission should be dissolved. The noble Viscount will forgive me if I say that I do not think he brought proof to bear to substantiate that statement, and perhaps some of the questions which I ask, to which I should like answers, will go some way to clarify that position.
I do not know whether August 31 has been chosen as the appropriate date because of the demise of the Minister of Materials in that month. The act of dissolving the Raw Cotton Commission could only be done jointly by the Ministers concerned, and I can only assume that, like the two gondoliers of the play of that name, one is going to be thrown overboard very soon, after which there will be a "one-man band," and that it was necessary to dissolve the Raw Cotton Commission while the Minister of Materials was still alive. Though in future we shall cease to see the noble Viscount, Lord Woolton, as the Minister of Materials, we are only too happy to think that in his other, perhaps far more important, position we shall still enjoy his company in your Lordships' House.
To deal now with the Order before us, Article 2 gives the Board of Trade and the Minister of Materials the power to appoint a person to be liquidator. Would the noble Viscount tell your Lordships' House whether the appointment has been made, or the selection for the appointment, and who it is? Is it to be one person, or can the singular in this case include the plural and can it be a firm, or must it be one individual? What staff is it proposed that the liquidator shall have, and what charge does the
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noble Viscount estimate will fall upon public funds? The noble Viscount, when referring to Article 3 about the long-term contracts with the Colonial countries which are printed here, said that these particular producers of raw cotton have not yet made up their minds whether they wish the contracts to continue. Would he inform your Lordships' House how long these contracts have to run—whether it is two, three or four years—and also whether the Minister (in this case, I take it that in future it will be the President of the Board of Trade) can instruct the liquidator to terminate these contracts? Will the noble Viscount give your Lordships' House a firm assurance that, should these marketing organisations as set out in the Order desire their contracts to be carried on, nothing will be put in the way of the observance of their wishes?
VISCOUNT WOOLTON: I did say so. I will give that assurance again.
LORD LUCAS OF CHILWORTH: I am obliged to the noble Viscount. Would he also give your Lordships some assurance with regard to the other Colonial and Commonwealth countries who, while they may not have had written contracts, had bulk-buying and long-term arrangements with the Raw Cotton Commission? I cite as an example the West Indies, with the Sea Island cotton. Should any of these much-prized markets wish to enter into further contracts at some future date—long-term contracts—would the noble Viscount tell us whether the President of the Board of Trade will be prepared to enter into such contracts? Will that be given consideration, or have we seen, once and for all, the end of the great Commonwealth development of cotton which I repeat now, as I have maintained all the way through, is so valuable? My noble friend Lord Ogmore quoted from the Report of the Colonial Office, which laid such great stress on the value of long-term contracts. Are we to say now that the door is shut, except in regard to the three specific instances which are set out in the Order? I feel sure that not only your Lordships' House but also the cotton industry and the country would like to have an authoritative statement upon that particular point.
When I come to Article 4, the powers of the liquidator, could the noble Viscount give us some idea of the values of

1137
the assets, other than stocks, which will pass to the liquidator? That is what I want to know, because Article 4 (2) says:
"The liquidator, in the course of winding up the Commission, shall, subject to the provisions of Article 5 hereof, have power—
(a) to sell the real and personal property and things in action of the Commission by public auction or private contract …"
I should like to know approximately the value of these assets. As regards the stocks, the noble Viscount was kind enough to tell us that the stocks of the Raw Cotton Commission held at the present moment amount to £20 million—I think that was the figure.
VISCOUNT WOOLTON: Approximately.
LORD LUCAS OF CHILWORTH: The noble Viscount then went on to give us the actual value of the spinners' stocks at the present time. Unless I misunderstood him, he gave one figure in sterling and the other in bales. Could the noble Viscount translate the spinners' stocks into the same figure—that is, the sterling figure—that he gave us for the Commission's stock, because that would be a comparable figure which your Lordships could easily see? Not many of your Lordships will be able to do the mathematical calculation as to what 230,000 bales, I think it was, would represent in sterling. I believe that the 230,000 bales which I have in mind was not the amount of the spinners' stocks, but the amount of the forward contracts. Does that not illustrate the value—and I wish to give the noble Viscount credit for this—of the arrangement which he made with the Raw Cotton Commission for the safeguarding of the interest of the contractors-in, for which we on this side of the House pressed so hard all the way through the Committee stage? Could the noble Viscount sub-divide that figure for us again?
Viscount WOOLTON: Which figure is this?
LORD LUCAS OF CHILWORTH: The 230,000 bales of cotton which the contractors-in could order from the Raw Cotton Commission, either on futures or spot.
VISCOUNT WOOLTON: Have ordered.
LORD LUCAS OF CHILWORTH: Have ordered. Would the noble Viscount tell us how much the Liverpool Cotton Exchange are going to hear on this? In other words, how much of that is on
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futures and how much was for spot that will be taken delivery of before, I think the noble Viscount said, May, 1955? All these things conjure up in my mind—and I do not want to use the term harshly—the haste of dissolving the Raw Cotton Commission. I should have thought that it might have been advisable not to dissolve the Raw Cotton Commission until May, 1955.
VISCOUNT WOOLTON: Why?
LORD LUCAS or CHILWORTH: Because that is the last day on which delivery can be taken. That was a reasonable time—I make no complaint whatsoever about the generosity of the noble Viscount's concession in this matter. But will the liquidator, who will have to carry on this sizeable business—unless, of course, he has other instructions from the noble Viscount's right honourable friend the President of the Board of Trade, which I do not suggest he will—and, very likely, will be buying a lot of cotton, be able to supply the demand of the contractors-in for the 230,000 bales, orders for which are now standing on the books of the Raw Cotton Commission and which the liquidator will have to take over? That is one of the thoughts in my mind in asking all these questions.
I join with the noble Viscount in saying that I agree that it is a good thing that the Advisory Committee is to continue. I hope that it will safeguard the interests, not only of the taxpayer but also of the trade. Whether or not this is a good thing, as I said about the Cotton Act, the Act which authorises this action, whether or not it will eventually be to the betterment of the Lancashire cotton industry and this country as a whole, remains to be seen. The noble Viscount has given a few opinions. They can be only opinions. I do not doubt the sincerity with which he expressed them, but the latest information I have is that all is not too happy in the Lancashire cotton industry, that two-thirds of Lancashire's output has now to be absorbed in the home market. The question is whether or not in future we shall get the raw cotton at lower prices than in the past. The noble Viscount—I thought he would bring it in—has mentioned losses valued at £20 million-odd. I would only remind your Lordships that I pointed out, on the Third Reading of the Cotton Bill, that

1139
the first essay of Messrs. Coats into the raw cotton market when contracting-out cost the Coats shareholders a few million pounds; so there was nothing very much to be gained that may not be gained to-day.
Those are all the observations that I have to offer. As I said at the outset, I do not alter my opinion about the inadvisability of taking this step at the present moment. From my investigations, end also from the outline which the noble Viscount has given commending this Order to your Lordships, I should have thought that it might be advisable to continue the Raw Cotton Commission for at least another twelve months. But if the noble Viscount will give me some of the assurances and some of the figures for which I have asked—I do not think I have asked for anything unreasonable—he will perhaps go a little way to allay even that fear in my mind.
3.3 p.m.
LORD OGMORE: My Lords, the whole House ought to be grateful to my noble friend, Lord Lucas of Chilworth, who has dissected this Order, has pointed out some of its defects and also one or two of its good points, and has asked a number of most important questions. I cannot pretend to anything like his knowledge of this subject. Therefore, I shall confine myself only to Article 3 (2) which refers to Colonial raw cotton. I think we managed to salvage something out of the wreck. My noble friend and myself, when the Cotton Bill, which is now an Act, was before the House, made a big protest about what we regarded as the "sale down the river" of the Colonial producers. We had no satisfaction whatsoever at that time, but the Government to-day, I am glad to see, have given us a little satisfaction—not very much but a little—because so far as concerns the three producing areas with which the Commission now deals, the subsisting contracts will be carried on if the producers so desire. That is what I understand to be the position.
VISCOUNT WOOLTON: That was my precise language.
LORD OGMORE: Then I have understood the noble Viscount and that is the position. The point that has been made by my noble friend, Lord Lucas of Chilworth, is an important one—namely, what
1140
happens to new contracts either by the existing authorities with whom the Commission has contracts or, as he said, the West Indies or any other producers? What is going to happen to those areas? Is there any possibility that they will be able to make long-term contracts? This is vital for a very important staple product of the Colonial territories. I should have thought that this was not a matter of Party politics; I should have thought that noble Lords opposite would feel equally worried as we feel on this point, because noble Lords opposite know as well as we do that, without long-term contracts and without, in some cases, bulk purchase, it is often quite impossible to develop a new product or sometimes to sustain an old one.
On occasion, I have been to various parts of the Colonial territories—West and East Africa, and so on. I always make a particular point, when I go to those places, of going into the bazaars and the markets, and ascertaining from the merchants themselves, and the retailers, what particular classes of goods are being sold and what their difficulties are. It is all right to see statistics in blue books, white books, green books and yellow books, but it is only when you get on to the ground and talk to the retailers themselves that you find exactly what their problem is. In West Africa, I found at that time that they were having great difficulty in getting British cottons—this was a few years ago. They liked them very much although the prices were rather high. Since then, there is no doubt that foreign cottons are flooding into the market, particularly from Japan. The result of the Government's recent Agreement with the Japanese is that we can expect a very large amount of Japanese cotton and printed goods to go into our Colonial territories.
We were able to say to some of these areas before: "We buy your raw cotton; we make arrangements through bulk purchase: we make arrangements through long-term contracts to take your raw cotton. We think in exchange you might take from us our printed goods, as a quid pro quo." But, if we are no longer going to help them to market their goods and no longer give them the security of long-term contracts, what basis have we for asking them to take up our printed cotton? It seems to me that this Order,

1141
which is supposed to be a great charter of liberty for Lancashire, will have not only possibly a devastating effect upon some of the Colonial territories whose raw cotton will be affected but also a very important effect on Lancashire's trade with those territories.
I am quite certain that it is not going to help Lancashire in the great competition in Colonial territories which she is going to face in the near future from Japanese cottons. We have been through all this before. I remember the time in the early 'thirties when in Malaya the goods imported from Britain went down from about 91 per cent. to 9 per cent. in a little over twelve months. We had to pass a special ordinance in Malaya to ensure the import there of a quota in proportion to the goods previously imported—that is to say, if imports from a certain country had previously amounted to 4 per cent., no greater proportion than that could be imported into Malaya. That was an extreme measure, almost a panic measure, but it had to be taken because, in one year or so, the exporting position from this country, from Lancashire, fell in such a devastating way. I ask the noble Viscount—I am serious about this—to bear this point in mind, not merely from the point of view of the Colonies themselves but also from the point of view of Lancashire. It is a two-way business—if we can help them, they will be prepared to help us. If we no longer help them, then they will probably say, or may say, "Why should we help Britain?" I think the Government should look at this, because it is really a most important matter.
3.10 p.m.
VISCOUNT WOOLTON: My Lords, I am much obliged to noble Lords for the way in which they have received my observations. I can assure the noble Lord, Lord Lucas of Chilworth, that the business of bringing in this Order had nothing to do with The Gondoliers. The functions of the Minister of Materials are quite independent of me or of the existence of the Ministry, and they will be transferred to the Board of Trade, subject to an Affirmative Resolution in both Houses of Parliament. I should be the last person in the world to assume that your Lordships would give your approval until the appropriate time. Just
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in passing—a slight personal observation—I have not been "thrown over-board"; I have deliberately dived, because the announcement that the Prime Minister made last week in another place was made at my special request.
I wish the noble Lord, Lord Lucas of Chilworth, who is always so full of courtesy, had told me of some of the arithmetical questions that he proposed to ask me. I dare not rely on my memory on such important issues, but I will do my best to answer his questions. I do not see why I should not answer the question about the liquidator. He has not been appointed, but as the law now stands he is to be appointed jointly by the Board of Trade and myself, and it is our intention to appoint the gentleman who at the present time is the Chairman of the Commission—his name is Jackson. He is a man who has had considerable experience in the banking world. I think he has the confidence of the people with whom he has been working. He was No. 2 to Sir Ralph Lacey for a considerable time, and both Mr. Thorneycroft and I have the greatest confidence in him. I believe that he will be an admirable appointment.
I was asked about the Colonial contracts. The Nigerian contract has two more seasons to run, the Aden contract three more seasons, and the Nyasaland contract four. I hope that I have given to the House the most explicit assurances that the responsibility for continuing these contracts now rests with Ministers and that we shall give instructions to the liquidator that he must honour these contracts. The contracting parties have to make up their minds whether they think it will be to their advantage to continue these contracts—and if so, there is no more to be said about it—or whether they would rather surrender them. Only their own advantage is to be considered in this matter—action, decision, lies with them. So, in regard to that part of Lord Ogmore's observations, I hope that I have completely covered the situation.
LORD OGMORE: That is the existing contracts?
VISCOUNT WOOLTON: Yes, the existing ones; I will deal will the others later. Noble Lords thought there was a little confusion arising from the arithmetic. I quoted the total stocks of cotton in the

1143
country as being 910,000 bales—those figures are obviously round figures. The approximate value of the cotton is £75 million. The stocks that I said rested with the Raw Cotton Commission when they had sold half forward, were 230,000 bales at an approximate value of £20 million. The arithmetic does not seem to be quite right—
LORD LUCAS OF CHILWORTH: Would the noble Viscount forgive me? This is the question I asked. The noble Viscount said that the present raw cotton stock of the Raw Cotton Commission was valued at £20 million. Am I to understand that he now says that the total of raw cotton—
VISCOUNT WOOLTON: I was just going to finish. If the noble Lord will just let me finish my sentence, I think I shall have given him the answer. The total stocks in the country are approximately 900,000 bales, valued at approximately £75 million. The Raw Cotton Commission will have unsold 230,000 of the 900,000 bales, valued approximately at £20 million. There is a divergence there, but that, of course, is due to the differences in the qualities of cotton; there is no fallacy. I rather wanted to point that out to your Lordships. I hope that I have answered that question to your Lordships' satisfaction.
LORD LUCAS OF CHILWORTH: Not quite; but it may be my own fault. I may have misunderstood the noble Viscount, but I thought he related the 230,000 bales to the figure which the contractors-in have placed with the Raw Cotton Commission in response to the concession that the noble Viscount made. I asked if he would tell us how much of that amount is being borne on the futures market, and how much was spot buying—in other words, would be paid for only on delivery. I am sure he will remember that under the arrangement—I have the statement that the noble Viscount made, and I expect he has too—the contractor-in could order with the Raw Cotton Commission as much of the new crops as would satisfy his needs right up to May, 1955. He could apply for it on the Liverpool Cotton Exchange futures market or he could have it on spot, which means that he need not pay for it until he actually took delivery, which might be somewhere in 1955, or even at a later
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date. I understand that 230,000 bales have been ordered on that arrangement. Which is futures, which is spot?
VISCOUNT WOOLTON: It is rather unreasonable that the noble Lord should ask questions like that without giving notice. This is a highly technical question. If I may venture an opinion (and it is no more than that) I believe that of the 460,000 bales—the noble Lord will remember that there are two amounts of 230,000—half of it will have been sold forward, and that half sold forward is subject to the arrangement that we made here, which, as I announced at the end of the last debate, they could have on call. Does that answer the noble Lord's question?
LORD LUCAS OF CHILWORTH: Approximately, it is quite enough. I cannot expect more.
VISCOUNT WOOLTON: I hope that I have now answered every question except the very important one put by the noble Lord, Lord Ogmore, about trade within the Empire. I yield to no one in my desire to see Empire trade developed, but this is not the only way in which Empire trade can be developed. It cannot be developed only by our placing long-term contracts forward. The Empire Cotton Growing Association, which I have known for very many years, made considerable developments in this field before there was any question of bulk buying being a necessity. I hope that noble Lords will not think that, because we give up this experiment (which arose really out of war-time necessity, and was subsequently carried on by the previous Government), we do not want to see Empire trade developed. We feel that with growing freedom there may be an advantage to this trade. Certainly we cannot continue to face these very large expenses by the Raw Cotton Commission—£22½ million this year and a somewhat similar figure for the previous year. These are very high expenses to put upon a nation. Surely there are methods other than this by which we can develop Empire trade. We are most anxious to develop that trade.
I was most interested to hear Lord Ogmore's suggestion—and, indeed, I shall take note of it—that we should enter into bargains with the Colonies and say, "If you do not take our cotton goods we will

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not buy your cotton." I hope we may, within the Commonwealth, move towards the same result by somewhat less ferocious methods, as I am sure the nob1e Lord, Lord Ogmore, also desires. Doubtless he put this suggestion forward merely as one means whereby that might be done.
LORD OGMORE: What the noble Viscount has said is a complete travesty of my suggestion. I said that if we are helping them by taking their raw cotton, they are more likely to help us, even though the price is against them, in taking our goods—which, as the noble Viscount knows, are very likely to be quite priced out by cheap Japanese cottons. They are more likely to help us if we are stabilising their raw cotton production. I should be the last person to threaten the Colonies in any shape or form. The noble Viscount is really rather unfair.
VISCOUNT WOOLTON: I did not mean to be unfair to the noble Lord; I only said that we might adopt other methods. I am sure that he would be glad to have other methods adopted. I can add little more, from my own knowledge on this subject, to your Lordships' deliberations and I hope you will now be good enough to pass this Order.
LORD LUCAS OF CHILWORTH: Before the noble Viscount sits down may I offer him an apology? I should certainly have let him have a list of the points I wished to raise. I did not see the Order until this morning, because my attention has been somewhat distracted by a rather serious family incident during this last fortnight.
VISCOUNT WOOLTON: I am very sorry; and I can only congratulate the noble Lord on the way in which, without any preparations at all, he got right to the heart of the subject and asked me such very awkward questions.
On Question, Motion agreed to.

GAS AND ELECTRICITY (BORROWING POWERS) BILL
Brought from the Commons; read 1a; and to be printed.
CIVIL DEFENCE (ARMED FORCES) BILL [H.L.]
House in Committee (according to Order): Bill reported without amendment.

LANDLORD AND TENANT BILL
Amendments reported (according to Order).
Clause 7:
Settlement of terms of statutory tenancy
(2) A landlord's notice proposing a statutory tenancy and anything done in pursuance thereof shall cease to have effect if by the beginning of the period of two months ending with the date of termination specified in the notice any of the following matters, that is to say,—
(a) what premises are to constitute the dwelling-house;
has not been agreed between the landlord and the tenant and no application has been made by the beginning of the said period of two months for the determination by the court of such of those matters as have not been agreed:
Provided that this subsection shall not have effect if at the end of the period of two months after the service of the landlord's notice the qualifying condition was not fulfilled as respects the tenancy unless the tenant has elected to retain possession.
THE LORD CHANCELLOR (LORD SIMONDS)THE LORD CHANCELLOR (LORD SIMONDS) moved, in subsection (2) (c), to omit the final "and" and to insert:
"(d) whether initial repairs to be so carried out are to be carried out by the landlord or by the tenant, or which of them are to be carried out by the landlord and which by the tenant; and"
The noble and learned Lord said: My Lords, there are a number of Amendments to this Bill which your Lordships are to consider. The first and second stand in my name as do fifteen more, all relating to the same subject. These Amendments all arise out of a suggestion for which I am indebted to the noble Lord, Lord Silkin. The Bill as drafted enables the landlord and the tenant, when a long lease is terminated, what are in the Bill defined as certain "initial repairs," They may agree to them and also agree as to who is to do them; but the Bill as drawn provided that, if they did not agree, it lay with the landlord to do the repairs. The tenant had no right

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to insist on doing them for himself nor any right to go to court and ask that the court should declare that his should be the right to do them. The noble Lord, Lord Silkin suggested that, in certain circumstances, that was not fair to the tenant; and he suggested that that position might be overcome if the tenant was given the right which the landlord had, to go to the court and ask the court to say that he—the tenant—should do those repairs. We have given much consideration to the noble Lord's suggestion and have agreed that it is a good one. I have accordingly put down a number of Amendments which carry out that suggestion. I hope the noble Lord will be satisfied that they do achieve that.
I have gone a little further, because whereas the suggestion was in regard to the repairs in toto—that they should all be done by the tenant or all be done by the landlord—it appeared to me that it might well be that some part of them could better be done by the landlord and some part of them could better be done by the tenant. Therefore, it will be open to the court to declare either that the landlord shall do the whole or the tenant shall do the whole or that they shall be done some by one and some by the other. In order to carry out that proposal a very substantial number of Amendments have been put down, but I think it will be sufficient if I put formally to your Lordships the first Amendment, which provides that Clause 7 shall be amended and a new paragraph—paragraph (d)—inserted. That paragraph is in these terms:
"whether initial repairs to be so carried out are to be carried out by the landlord or by the tenant, or which of them are to be carried out by the landlord and which by the tenant; and".
I think I need say no more about that Amendment. I beg to move.
Amendment moved—
Page 6, line 37, leave out ("and") and insert the said new paragraph.—(The Lord Chancellor.)
3.32 p.m.
LORD SILKIN: I very much appreciate the fact that the Government have seen fit to accept the proposal which I made during the Committee stage. I am sure it is an improvement in the Bill and I am grateful to the noble and learned Lord who sits on the Woolsack for having gone further even than I had suggested.
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A salutary thought occurs to me. It appeared to me, in my innocence, that this could be achieved by one Amendment; in fact, it has been found necessary to amend this Bill in, I think, sixteen different places to achieve this very simple object. Next time we are criticised for the language of our Amendments, or for their inadequacy—and I expect this may happen on more than one occasion in future—I should like to refer to this Bill to illustrate the extreme difficulty which any ordinary Member of this House has in drafting Amendments. Here I genuinely thought was a very simple Amendment, but to make it we find requires a great deal of amendment to the Bill. However, I am very grateful indeed for the trouble that has been taken, and I am glad to say that these various Amendments entirely carry out what I had in mind.
On Question, Amendment agreed to.
THE LORD CHANCELLOR: My Lords, I think it may well be for the convenience of the House if the noble Lord, Lord Silkin, who is specially interested in this matter, will follow me and if I take all the Amendments on page 1 of the Marshalled List, except No. 3, which deals with a separate matter. I beg to move together Amendments Nos. 2, 4, 5, 6, 7, 8, 9, 10, 11, 12 and 13.
Amendments moved—
Clause 7
Page 7, line 3, leave out ("d") and insert ("e").
Clause 8
Page 7, line 41, leave out ("the landlord shall carry out") and insert ("the terms mentioned in subsection (1) of the last foregoing section shall include the carrying out of")
Page 8, line 1, at end insert ("and as respects which it has been agreed or determined as aforesaid that they are to be carried out by the landlord")
Page 8, line 11, leave out subsection (3)
Page 8, line 30, at end insert ("in so far as they are to be carried out by the landlord;")
Page 8, line 40, leave out ("or tenant's initial repairs")
Page 8, line 42, after ("landlord") insert ("or the tenant").
Clause 9
Page 9, line 11, at end insert—
("(3) Notwithstanding anything in subsection (1) of section seven of this Act, the court

1149
shall not have power to determine that any initial repairs shall be carried out by the tenant except with his consent")
Page 9, line 17, leave out ("by the landlord ")
Page 9, line 28, leave out ("by the land-lord")
Page 9, line 40, leave out subsection (5).—(The Lord Chancellor.)
On Question, Amendments agreed to.
THE LORD CHANCELLOR: My Lords, if I may—and I hope it is not inconvenient to your Lordships—I will come now to the Amendments to the Second and Fifth Schedules, Amendments Nos. 32, 33, 34 and 35, which still relate to the same leading Amendment. I ought to mention them specially for this reason: that they contain—at any rate, Amendment No. 32 contains—something to which I ought to call your Lordships' attention, though I think you will have no difficulty in agreeing to it. Amendment No. 32 provides for an Amendment of the Second Schedule, and it has this aim. Where, by virtue of an agreement between a landlord and tenant, or as the result of a determination by the court, obligation to do certain repairs falls upon the tenant, then it is thought right that if he fails to perform that obligation that should be a ground for determining the tenancy. Obviously, there is no other sanction. The tenant says: "Here are repairs to be done; I will do them," and he invites the court to say that he shall do them. The court says that he shall, and then if he does not do them, clearly that is a breach of his obligation and it ought to give rise to determination of the tenancy if the landlord thinks fit. I do not think that is an unreasonable thing to provide. I beg to move Amendments Nos. 32, 33, 34 and 35 together.
Amendments moved—

SECOND SCHEDULE
Page 57, line 30, at end insert—
("Failure of tenant to carry out initial repairs
4. Where, by virtue of an agreement or of a determination of the court, the tenant is required to carry out initial repairs to the dwelling-house, failure by the tenant to carry out the repairs within a reasonable time in accordance with the agreement or determination shall be treated as a breach of the obligations of the tenancy for the purposes of paragraph (a) of the First Schedule to the Act of 1933 (which relates to recovery of possession where the rent has not been paid or any other obligation of the tenancy has not been performed).")
Page 58, line 20, leave out ("by the landlord")
Page 58, line 24, leave out sub-paragraph (2).

FIFTH SCHEDULE
Page 64, line 37, leave out ("or tenant's initial repairs").—(The Lord Chancellor.)
LORD PETHICK-LAWRENCE: My Lords, on a point of Order. I venture to think we are proceeding in a very unusual way by moving about among the various clauses of the Bill as the noble and learned Lord proposes. I suggest that though we are quite prepared to discuss the amending of later clauses on a Motion dealing with earlier clauses, we cannot deal with later clauses and then go back and deal with an earlier one. I venture to think that that would be quite contrary to all our practice.
THE LORD CHANCELLOR: My Lords, I am entirely in the hands of the House. It is undoubtedly an unusual way of proceeding. But as these Amendments are related, and it is a very complicated story, I thought the course which I have suggested might be for the convenience of the House.
LORD PETHICK-LAWRENCE: The point is that I do not think we can deal with later Amendments and then go back and deal with an earlier one.
EARL JOWITT: I think the course which the noble and learned Lord who sits on the Woolsack was proposing to take is a very convenient one, but, if I may humbly suggest it, I think it would be better if he put Amendment No. 3 now and got the decision of the House on that. Then, when he comes to the others, he can say, "These are consequential" and he can get the agreement of the House to them.
THE LORD CHANCELLOR: I will do whatever is convenient to the House. In fact the House has approved Amendments 1 to 13 except for Amendment 3.
LORD SILKIN: That means that if one has any comment to make, say on Amendment No. 32, that comment can be made when 32 is called.
THE LORD CHANCELLOR: I will come back to that.
Amendments, by leave, withdrawn.
THE LORD CHANCELLOR: I beg to move Amendment No. 3 which stands in my name. It is purely a drafting Amendment. The words to be left out are, in fact, inappropriate in the context in which they occur. I beg to move.
Amendment moved—
Page 7, line 29, leave out ("paragraph (b) of").—(The Lord Chancellor.)
On Question, Amendment agreed to.
3.39 p.m.
LORD OGMORE LORD OGMORE moved, after Clause 14 to insert the following new clause:
"15. Where a sub-tenant of premises to which this Part of this Act applies is in occupation of them at the date when the term granted by the superior tenancy expires and where the sub-tenant takes advantage of his rights under this Act and continues in occupation of the premises then so far as the tenant is concerned provided he does not occupy any part of the said premises the covenants on the part of the lessee contained in the superior tenancy shall be deemed not to apply to the tenant or to anyone claiming through or under him other than the sub-tenant in occupation of the premises as aforesaid."
The noble Lord said: My Lords, I beg to move this Amendment which stands in the name of my noble friend Lord Silkin and myself. It is, I am afraid, a rather technical Amendment, in the sense that the wording is rather technical, though, of course, it will affect quite a large number of people in a way which I am quite certain most of them now fail to appreciate. I have tried to draft the Amendment so as to establish the principle which we want to establish. As my noble friend Lord Silkin has already pointed out it is very difficult for Members of this House like ourselves, who have not the support of Parliamentary Counsel or a Department behind us, to be quite sure that we have put down the best form of words to be included in the Bill. If the principle is accepted, we hope that Parliamentary Counsel will make any adjustments which there may have to be. Your Lordships may remember that during the Committee stage I put down a clause very similar to this, and the noble and learned Lord who sits on the Woolsack asked me to explain it—which I did, or tried to do. The noble and learned Lord said that he would like the clause to be put down for the Report stage, and he also pointed out that under the wording of my original clause a sub-tenant who was in occupation of
1152
the premises might be excluded. I need hardly say that he was right, and in the wording of this Amendment I have excluded the sub-tenant from the provisions of this clause.
This clause particularly affects those areas, like South Wales and Lancashire, where many houses are under leasehold, but it also affects other areas. I think it will be generally agreed that occupying tenants, if they take advantage of their rights under the Bill, are in a stronger position than before. I do not think there is any doubt about that. Occupying sub-tenants are also in a stronger position than before; but non-occupying tenants, those who have let their premises, though they do not own the freehold, are in a weaker position than they were in before. I cannot believe that this was the intention of the Government. This is not a political matter at all, but it is going to affect very largely what we usually term the "middle class," and I cannot believe that a Conservative Government have gone out of their way to injure the middle class. The Bill destroys the bargaining power of the non-occupying tenant. He is politely waved away from any rights which he may have from his position as a tenant of the premises, yet his liabilities remain. Previously he could have bargained with the landlord or the tenant—with the one to relieve him from obligations under the head lease and with the other to accept obligations under the head lease. Now he can do neither.
This Bill recognises and defines a new relationship between the superior landlord and the occupying sub-tenant. It may be said, of course, that the non-occupying tenant is in no worse position than the occupying tenant who vacates his premises voluntarily. This is not really so, however, because, first of all, in such a case the occupying tenant makes a voluntary decision and, secondly, the premises are in his own hands and not in the hands of someone else, so that he has had some opportunity of preventing the premises from getting into a state of dilapidation. In Committee stage the noble and learned Lord on the Woolsack referred to the rights of such a non-occupying tenant under the Landlord and Tenant Act, 1927, but as I understand it, reading Section 18 (1) of the Act, the first part

1153
of the subsection does not relieve him of his obligations to keep the premises in repair and to put them in repair on termination of the lease. It only limits the extent of the liability—namely, the amount by which the value of the reversion to the landlord, whether immediately or not, of the premises is diminished owing to the breach of covenant. So that the Landlord and Tenant Act does not save him from liability; it only, so to speak, fixes the limit of his liability.
It must be remembered, in assessing the amount of this liability, that under the Landlord and Tenant Act no allowance is made for the increased value of the property to the landlord through rights having been determined; but equally the landlord is not precluded from recovering damages because the premises are let to a new tenant (or, as I submit, a new subtenant), at a full economic rent, the latter having agreed to put the premises in a good decorative state of repair within a specified time, if repairs have to be carried out and the value of the reversion has been diminished by breach of covenant. This is not affected by any arrangement for carrying out repairs which the landlord has made with the new tenant (or, as I submit, with the new sub-tenant); so that, in effect, the mere fact that the landlord is able to get someone else to carry out the obligations under the lease does not release the non-occupying tenant from his obligations to do so, if his failure to do so has diminished the value of the reversion, as it is obviously bound to do in some sense or other. The tenant under the lease will be responsible for the decorative repairs and will be required to leave the premises in good and decorative order. He will not be able to apply to the court for relief under Section 147 of the Law of Property Act, 1925, because the section has no reference in four classes of case, any of which may apply, and the last certainly will—namely, the case of a contract to yield up the premises in a specified state of repair at the end of the term. The Leasehold Property (Repairs) Act, 1938, does not apply, since it envisages relief for failure of covenant to keep a house in repair; and here again the test is damage to reversion.
I am afraid that this is a very technical matter. I have tried to seek out the various Acts of Parliament which I think apply, and I see that under them the non-
1154
occupying tenant can get no relief whatsoever—or at all events very little—from his obligations under the lease. I appreciate the difficulties which no doubt the noble and learned Lord on the Woolsack will point out to your Lordships. Of course, there are many difficulties on the other side. It is difficult to relieve the tenant. It may be said that if the tenant is relieved of his obligations and they are transferred to the sub-tenant, there is nothing to prevent a tenant who is so inclined from granting a sub-tenancy towards the end of his lease. That is perfectly true. But there is also nothing to prevent him from assigning his lease; and if he does so, then the man in possession would not be a sub-tenant but an occupying tenant and, therefore, would receive the benefit of any rights and remedies of this Bill. No doubt there are other difficulties, and I fully appreciate that that is so. However, I also say that there are injustices, and I feel that it would be a substantial injustice if we were to single out the non-occupying tenant and prevent him from making any bargain, with either his sub-tenant or his landlord, and at the same time expect him to carry out all the obligations under the head lease. I feel that we cannot by law bind one party to a contract and allow the other party to go free. I think that is bound to be wrong. Though this is a difficult matter, I believe that it is within the wit of the Government to provide some sort of remedy for what seems to me to be an undoubted injustice. I beg to move.
Amendment moved—
After Clause 14, insert the following new clause—
("15. Where a sub-tenant of premises to which this Part of this Act applies is in occupation of them at the date When the term granted by the superior tenancy expires and where the sub-tenant takes advantage of his rights under this Act and continues in occupation of the premises then so far as the tenant is concerned provided he does net occupy any part of the said premises the covenants on the part of the lessee contained in the superior tenancy shall be deemed nit to apply to the tenant or to anyone claiming through or under him other than the sub-tenant in occupation of the premises as aforesaid.")—(Lord Ogrnore.)
3.49 p.m.
THE LORD CHANCELLOR: My Lords, I am sorry that I cannot accept this Amendment. As the noble Lord, Lord Ogmore, says, this is a matter of infinite complexity and, if I may say so, he has touched only the fringe of it. The

1155
Amendment proposed lets out altogether a tenant who has granted a sub-tenancy, and for that it is difficult to see any justification at all. Here is a tenant who has entered into a bargain with his landlord. He has thought fit to grant a sub-tenancy, it may be for a long term or it may be for a short term. It is difficult to see why, by that fact, he should be relieved altogether of his bargain.
I have said that the matter is complex, and, in truth, it is. The noble Lord has made one differentiation which I think is really vital. I am afraid that I must be technical here, and I am sure your Lordships will forgive me. The noble Lord's Amendment deals with the non-occupying tenant; that is to say, the tenant who stands between the original landlord and the sub-tenant, whom we will assume to be in occupation. The sub-tenancy that is created may itself be a long or a short one. It may be one which comes within Part I of the Bill, in which case the sub-tenant in occupation is the person who is enabled to make a bargain with the landlord; and if he has made such a bargain with the landlord, it might conceivably (I say no more) act in a way which was detrimental to his landlord, who was the first tenant. But that is provided for by the Bill, and I venture to think that the noble Lord has overlooked it, as he well might.
Perhaps I may take a simple illustration. Let me assume that A is the freeholder, B the lessee at a ground rent and C the sub-lessee, the occupying tenant, at an improved ground rent, a man who therefore comes within Part I. If C retains possession as a statutory tenant under Part I, B cannot enforce against C the covenants in the sub-lease; B is therefore relieved of liability under the covenants of the head lease. If the noble Lord will look at Paragraph 11 of the Fifth Schedule—and it takes a long time to get to Paragraph 11 of the Fifth Schedule—he will see that that is so; and so far as the original tenant is concerned, where he has created a sub-tenancy which is itself a long lease and falls within Part I, then the object which the noble Lord has in mind is attained, and the original lessee—or his successor in title—is relieved of his liability under the original lease. I believe that that point has escaped the noble Lord, as it may well
1156
do, and that in fact he is entirely met on that point.
We now come to something much more difficult, and I am quite unable to meet the noble Lord. He says that there are difficulties in drafting. There are insuperable difficulties in drafting anything which will give effect to what the noble Lord wants and yet not do grave injustice to the landlord. A landlord, without creating a sub-lease which falls within Part I, may yet create an infinite variety of leases, imposing any sort of obligation you like upon his sub-tenant. It may be twenty-one years at a rack-rent, containing wide obligations in regard to repair; it may be a weekly tenancy, which very likely contains little. How are we to deal with such a case as that? The only way is to leave the man exactly as he was before this Bill was passed. I venture to think that there is a great deal of fallacy in the noble Lord's suggestion that in such a case as this—a case which does not fall under Part I, as a whole, but only under the new Clause 15—a subtenant is prejudiced in any way by the provisions of this Bill. He is in exactly the same position as any other tenant who is under an obligation to repair.
Your Lordships will remember that that was the subject of special reference to the Committee which was presided over, first, by Lord Uthwatt, and later by Lord Justice Jenkins. The question that was put to that Committee, which applies equally to the tenant whom the noble Lord has in mind, as to any other tenant, was:
"Whether the rights of a landlord to impose and enforce covenants to repair should be further restricted, and in what manner."
I dealt with this point at some little length on the earlier stage. I put to your Lordships the reasons which animated the Committee and led them to the conclusion to which they came, which was that the existing law did justice as between landlord and tenant. There are already substantial provisions in the Act of 1927 and the Act of 1938 which mitigate the position of the tenant, and the Committee, dealing with this matter, said—and it was a unanimous Report—that they did not think any further relief was necessary. They were animated by a number of reasons into which I need not go again.
However, I would put this as one reason. This is a matter of a degree of

1157
technicality which, if I do not use too strong a word, is really appalling. I feel the greatest anxiety about this measure, and about the preceding measure which was lately before this House—namely, the Housing Repairs and Rents Bill. In a subject matter necessarily artificial we are increasing the artificiality to a degree which frightens me. For how the practitioner in the law is going to find his way through the complex provisions of Acts like these, I really do not know. But this I do know: if we attempt to alter the law any further in regard to the position of the tenant, where the subtenant gets the benefit of this Bill, it will land us in a degree of complexity which will be unparalleled. I say, as I have said before, that there will no doubt be cases, as a result of this Bill, where the mesne tenant will be prejudiced; there will be others where I am quite sure he will be greatly benefited, because the result of the tenant's staying on on the terms of his original lease, containing obligations in regard to repair of which the landlord will get the benefit, will greatly redound to his, the mesne tenant's, advantage. There may be cases the other way; there may be cases where the balance is about even. But of this I feel positive: that it is impossible, either by such an Amendment as the noble Lord has put down, or by any other Amendment that the wit of man can devise, to do justice in every case; and we have to adopt a rough-and-ready method of dealing with it. It is simple enough to adopt a rough-and-ready method of dealing with it, because it merely means not altering the law in this respect.
One final word I would say about this. Do not let us forget that the main purpose of this Bill is not to deal with questions of repair but to secure to the occupying tenant his continued occupation. That is achieved. If we have also been able to do something in the way of altering the relations of landlord and tenant in regard to repair, that is by the way and does not touch the main purpose of the Bill, which, as I have said, is to give the occupying tenant the right to remain in occupation. That I have satisfied the noble Lord I cannot hope, but I cannot advise your Lordships to accept this Amendment, and I hope that he will not press it.
LORD OGMORE: I am grateful to the noble and learned Lord for going into this matter so carefully and for giving us such a lucid explanation. As I said when moved this Amendment, this is a complex matter, and I, for one, as a practitioner of the law, do not wish to add to the complexity of the law. To my mind, as the noble and learned Lord has said, it is complicated enough already, and these two Bills, one of which we have passed and the other of which we are now passing, have not by any means detracted from the complexity of the law of landlord and tenant. I must say, however, that I do not entirely blame myself for not noticing this part of the Schedule. It is in rather abstruse language. I did raise this question on Second Reading, to which I got no reply from the Government spokesman. I do not blame the Government for that, but the fact remains that I did not get a reply. I raised the matter again in Committee, and again got no reply. It is not until now, at a late stage of the Bill, that my attention has been drawn to the Schedule. Therefore, I cannot hold myself entirely to blame for not spotting this rather abstruse provision. I am very pleased indeed with the assurance of the noble and learned Lord on the Woolsack that the provision in Paragraph 11 of the Fifth Schedule does cover, at all events the main point that I have in mind. With that agreeable assurance, I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 22 [Interpretation of Part I]:
THE LORD CHANCELLOR: My Lords, I do not know whether I should treat this Amendment as having been before the House already, but perhaps I had better formally move it. It is a purely consequential Amendment, and was dealt with on the first Amendment. I beg to move.
Amendment moved—
Page 19, leave out lines 27 and 28.—(The Lord Chancellor.)
On Question, Amendment agreed to.
Clause 23 [Tenancies to which Part II applies]:
THE LORD CHANCELLOR: My Lords, this Amendment also I owe to the suggestion of the noble Lord, Lord Silkin. The reason for it is that there

1159
was an ambiguity in the drafting. Clause 23 (3), as printed, says that
"… the expression 'the holding,' in relation to a tenancy to which this Part of this Act applies, means the property comprised in the tenancy, there being excluded any part thereof which is occupied neither by the tenant nor by a person employed by the tenant for the purposes of a business by reason of which the tenancy is one to which this part of this Act applies."
As the Bill was originally drafted, and as I have read it, there was some doubt whether the words, "for the purposes of a business by reason of which," and so on, qualified only the person employed by the tenant or the tenant as well. It was intended to qualify only the person employed by the tenant, and the words I now propose to insert, "and so employed" after "tenant" give effect to that intention. I beg to move.
Amendment moved—
Page 20, line 19, after ("tenant") insert ("and so employed").—(The Lord Chancellor.)
On Question, Amendment agreed to.
Clause 30 [Opposition by landlord to application for new tenancy]:
THE LORD CHANCELLOR THE LORD CHANCELLOR moved, in subsection (1), to leave out paragraph (d). The noble and learned Lord said: My Lords, this Amendment is also one for which the noble Lord, Lord Silkin, pressed. Clause 30 deals with the grounds on which a landlord (we are in Part II of the Bill now) may oppose an application under subsection (1) of Clause 24 for a tenancy. Paragraph (d) provides that a landlord might oppose such an application on the ground that the tenancy agreement itself contained a bargain between the parties as to the terms on which a renewal might be granted. The view which Her Majesty's Government took was that if the parties had already agreed the terms upon which there should be a renewal it was not right to give them, in addition, the statutory right of renewal for which the Bill provided. They made their own bargain, so why give them something else? The noble Lord, Lord Silkin, pointed out that the terms offered in the Bill might be more favourable than those for which the agreement provided, and said that it was not fair that the tenant, in such circumstances, should be deprived of the statutory provision. We have considered that, and we think that there is at least enough in it to make the concession for which the noble Lord was
1160
eager. Accordingly, we agreed that that provision shall be deleted from the Bill. The landlord will not be able to avail himself of there being such a provision as paragraph (d) prescribes, to oppose a tenant's application for a new tenancy. I do not think the noble Lord can complain of my Amendment, or that any of your Lordships on either side of the House will do so. I beg to move.
Amendment moved—
Page 24, line 21, leave out paragraph (d).—(The Lord Chancellor.)
LORD SILKIN: My Lords, not only do I not complain of the Amendment, but I am very grateful for it. I am grateful both for the sympathetic consideration which has been given to it, and also for the fact that it is an improvement in the Bill.
On Question, Amendment agreed to.
Clause 37 [Compensation where order for new tenancy precluded on certain grounds]:
THE LORD CHANCELLOR: My Lords, Amendments Nos. 18 and 19 go together. They are purely drafting in order to remove a possible ambiguity. I beg to move.
Amendment moved—
Page 28, line 26, after ("precluded") insert ("(whether by subsection (1) or subsection (2) of section thirty-one of this Act)").—(The Lord Chancellor.)
On Question, Amendment agreed to.
Amendment moved—
Page 28, line 27, leave out ("on") and insert ("by reason of ").—(The Lord Chancellor.)
On Question, Amendment agreed to.
Clause 55 [Compensation for possession obtained by misrepresentation]:
4.8 p.m.
LORD SILKIN LORD SILKIN moved, after subsection (1) to insert:
"(2) Where under Part I of this Act an order is made for possession of the property comprised in a tenancy on the ground contained in paragraph (a) of subsection (1) of section twelve, or under Part II of this Act the court refused an order for the grant of a new tenancy on the ground contained in paragraph (g) of subsection (1) of section thirty, then without prejudice to the rights of the tenant under the last preceding subsection, if it appears to the court after the expiration of two years from the date of such order or refusal that no effective step has been taken by the landlord to carry out the demolition or reconstruction of the premises, the court may

1161
order the landlord to pay to the tenant such sum as appears sufficient as compensation for damage or loss sustained by the tenant as the result of the order or refusal unless the court is satisfied that the failure or omission to take such step as aforesaid is due wholly to circumstances which could not reasonably have been foreseen at the date of such order or refusal."
The noble Lord said: My Lords, this is similar to an Amendment which I moved at the Committee stage, but I have taken advantage of the statement that was made by the noble and learned Lord, the Lord Chancellor, in opposition to the previous Amendment, and I hope that I have suitably altered it to meet some, if not all, the objections that he then made to it. I can put the grounds for this Amendment very shortly. As the noble and learned Lord said on an earlier Amendment, the main purpose of this Bill is to provide security of tenure for persons whose tenancy is coming to an end. But the Bill, as it stands, provides a number of exceptions in both Parts—both in the case of a dwelling house and in the case of business premises. One of those exceptions, and the exception that is dealt with in this Amendment, is where the landlord seeks to obtain possession because he wants to redevelop his premises and he cannot redevelop without getting possession. There is no difference of opinion that, if the landlord really intends to redevelop, that is a proper ground for his getting possession.
On the Committee stage I had an Amendment down that the landlord should provide alternative accommodation. That did not commend itself to the Government, and I have not put such an Amendment down again. There was a good deal of discussion on this matter in another place. It was felt that a landlord might say that he wanted possession on the ground that he was going to redevelop. He might even, as required by certain provisions in the Bill, go so far as to prepare plans and get town planning approva land by-law approval. He might go through all those motions but, nevertheless, he might never intend to carry out the redevelopment. He might be doing all that merely in order to get possession with a view later to selling the premises at a higher price with vacant possession.
Accordingly an Amendment was introduced at a later stage in the Bill in another place which provided that, where
1162
a landlord obtained an order for possession by withholding material facts or by misrepresentation, that should give rise to an action for damages on the part of the tenant. The point I am making—I hope the noble and learned Lord will not think it is too subtle—is that a landlord may all the time never intend to carry out redevelopment. He may go through all these motions. It may be quite impossible for a tenant to prove misrepresentation or concealment of the facts, because the state of a man's mind—I know it has been held judicially—is a question of fact; but it is an extremely difficult thing to prove in a court of law. I submit that it is, in practice, impossible for a tenant to go to the courts and say: "The landlord never intended to carry out this redevelopment."
Moreover, the noble and learned Lord, on the Committee stage, pointed out that a landlord might quite genuinely have been compelled to change his mind, through changed circumstances. Of course, a landlord may even have died soon after and thus been completely prevented from carrying out this redevelopment. Therefore the earlier Amendment that I submitted, which was that, if nothing had been done by the end of two years, if there had been no redevelopment by then, the landlord should be held liable for damages, was, I quite see, rather too wide, and did not provide for circumstances where the landlord had genuinely intended to redevelop but had found himself unable to do so. In view of the difficulty of establishing what was in the mind of a landlord when he went to the court and obtained an order for possession on the ground that he wanted to redevelop, I say, in effect, in this Amendment: "Let us see what the position is at the end of two years. If at that time he has not redeveloped, then it should be for him to show reasons why he did not redevelop." In other words, the onus should then be on him. If he is unable to discharge the onus, then he should be responsible for damages in the same way as if he had misled the court; but, if he can satisfy the court or, in most cases, the late tenant—that would be quite sufficient—that he had good reasons for not proceeding with the redevelopment, there will, of course, be no legal penalty imposed upon him.

1163
It seems to me a perfectly reasonable Amendment and one which would remove any possible suspicion on the part of a tenant and on the part of the general public that it is going to be easy to evade the provisions of this Bill. We are out to give security to tenants. I recognise that in proper cases we ought to encourage redevelopment. We do not want to do anything to prevent proper redevelopment. What we do not want, however, is that landlords should be able to shelter behind the provisions relating to redevelopment, get possession of their premises and then use them for some other purpose. This provision, apart from being a beneficial one which would enable tenants to get the benefit of this Bill, which it is intended that they should get, would have a salutary effect on landlords who had in mind the possibility of evading the provisions. If this were in the Bill, no landlord faced with the likelihood that he would have to establish that he had not carried out redevelopment as he had said he would because of circumstances which had arisen since the making of the order, would take a chance and face the likelihood of having to pay damages. While dare not hope that I have correctly drafted this Amendment—probably, it would mean fourteen or fifteen consequential Amendments to the Bill—nevertheless, I hope that the Amendment as I have drawn it is sufficiently clear to justify our having a discussion on its merits. I beg to move.
Amendment moved—
Page 40, line 36, at end insert the said subsection.—(Lord Silkin.)
4.17 p.m.
THE LORD CHANCELLOR: My Lords, I am sorry that, having given the noble Lord two or three Amendments already, I am unable to give him this one. Any court embarks upon a very serious question when it seeks to find out what is a man's intention at any given moment. Indeed, if I can call upon my recollection, there has been some conflict of judicial opinion upon this point. One old saying that I remember is:
"The devil himself knoweth not the mind of man, but he shall be judged by his acts."
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Another saying is:
"The state of a man's mind is as much a fact as is the state of his digestion."
Both observations have high judicial authority. So far as the immediate subject matter is concerned, the position is simply this. If a landlord takes advantage of the relevant provisions of this Bill, goes to court and makes a misrepresentation or conceals material facts and thereby obtains an order to which he would otherwise not be entitled, it is very right and proper that he should suffer accordingly. But it is quite a different state of affairs if, for reasons which lie not within his control, he is unable to carry out his genuine intention. I dissent altogether from the proposition, which is implicit in the noble Lord's Amendment, that a man must prove that he is innocent. It is a golden thread running through our law that, if a man is charged with any offence, whether it be a criminal offence, a fraud in law or anything of that kind, that must be proved against him. I object altogether to an Amendment in which the suggestion is implicit that he has been guilty of fraud, misrepresentation or concealment because for two years no effective step—that is the word—has been taken.
I will concede this to the noble Lord out of my somewhat long experience of the law: that the onus will quickly shift. Though it is perfectly true the Amendment as it stands states that it is for the tenant to establish that his landlord has been guilty of misrepresentation or concealment yet the burden will quickly, shift; and if for two years no effective step, whatever that may be, has been taken, I cannot conceive that the landlord would not find himself in the witness box and in the position of having to explain whether or not what he had said was true. I think that if for two years no effective step had been taken, he would find some embarrassment and great difficulty in satisfying the court that he had not concealed facts, that he had not made some misrepresentation. Then he would suffer accordingly.
But I dissent altogether from the proposition that, because of the mere fact that for two years no effective step has been taken, the burden upon him is then to prove that he was acting honestly and with propriety. All manner of things may have happened in the two years which

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have made it impossible, or at any rate unprofitable, for him in that time to take an effective step. I would not put him in this position: that as the months go by he does not know whether he, honest man enough, may not be attacked on the ground that he has not taken an effective step, and be led into taking some step or other in the process of development which he would have deferred. With great respect, I think that this is a case where we had much better stand by the clause in the terms which it originally provided, which will, as I firmly believe, be an adequate safeguard against the sinister sort of creature which the noble Lord contemplates in his hypothetical landlord. After all, there may be such men; but I do not think there are many men who would deliberately go through the motions of preparing for development—motions which would look as if he were about to develop—go to the court, it may be perjure himself and say that he intended to develop, when all the time he did not mean anything of the kind. If there are such men, I firmly believe that under the clause as it now stands they will be caught and will pay due compensation to the tenant. For those reasons I am sorry that I cannot accept the Amendment which the noble Lord has moved.
LORD SILKIN: My Lords, I can speak again only by leave of the House, but as I propose to withdraw this Amendment perhaps I may just say this: that if the noble and learned Lord's prognostications as to what would be likely to happen were entirely correct, if one could really get the landlord into the witness box, I should feel perfectly happy. But as the noble and learned Lord knows, as the Bill stands the onus of proof is on the tenant, and he may never be able to carry his case far enough to get the landlord into the witness box. I agree that fortunately this will not apply to many cases. I am happy that that is so. Most people are honest in their behaviour. But this clause is designed for people who suppress material facts. Therefore the noble and learned Lord and I are in agreement that there are dishonest people about, and by this Amendment we should be guarding ourselves against them. However, I do not wish to press this matter; it has been carefully considered by Her Majesty's Government and I do not think
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it is a matter of first-rate importance. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 57:
Modification on grounds of public interest of rights under Part II
57.—(1) Where the interest of the landlord or any superior landlord in the property comprised in any tenancy belongs to or is held for the purposes of a Government department or is held by a local authority, statutory undertakers or a development corporation, and the Minister or Board in charge of any Government department certifies that it is requisite for the purposes of the first-mentioned department, or as the case may be, of the authority, undertakers or corporation, that the use or occupation of the property or a part thereof should be changed by a specified date, then,—
(a) if a notice given under subsection (1) of section twenty-five of this Act specifies as the date of termination a date not earlier than the date specified in the certificate and contains a copy of the certificate subsections (5) and (6) of that section shall not apply to the notice and no application for a new tenancy shall be made by the tenant under section twenty-four of this Act:
4.23 p.m.
THE LORD CHANCELLOR THE LORD CHANCELLOR moved, in subsection (1), to leave out all words after "development corporation" down to "then," and to insert instead:
"the Minister or Board in charge of any Government department may certify that it is requisite for the purposes of the first-mentioned department, or, as the case may be, of the authority, undertakers or corporation, that the use or occupation of the property or a part thereof shall be changed by a specified date.
(2) A certificate under the last foregoing subsection shall not he given unless the owner of the interest belonging or held as mentioned in the last foregoing subsection has given to the tenant a notice stating—

(a) that the question of the giving of such a certificate is under consideration by the Minister or Board specified in the notice, and

(b) that if within twenty-one days of the giving of the notice the tenant makes to that Minister or Beard representations in writing with respect to that question, they will be considered before the question is determined,

and if the tenant makes any such representations within the said twenty-one days the Minister or Board shall consider them before determining whether to give the certificate.
(3) Where a certificate has seen given under subsection (1) of this section in relation to any tenancy."
The noble and learned Lord said: My Lords, this is an Amendment which I have to move, once more to give effect

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to suggestions made by the noble Lord, Lord Silkin, and, I think, the noble Lord, Lord Ogmore. Let me say at once that it is a very elaborate Amendment, and it arises in this way. Where the landlord of lands to which Part II refers is a Government Department, a local authority or a statutory undertaker, it is provided by the Bill that the landlord shall be in a more favourable position in regard to resuming possession, in that a certificate may be given by the Minister that a change of use (those are the words used in the Bill) of the land is requisite—which means, in effect, that the Department may resume possession of the land for its own purposes. Of course, here we start with the assumption—this is the background—that this land has already been acquired by a Government Department or local authority or statutory undertaker, and therefore the first condition has been satisfied: that it is proper to be so taken. Any tenant of such land knows that it is land acquired for that purpose—namely, for Government or local authority use, or for the use of a statutory undertaker. But very often the Department, local authority or statutory undertaker, as the case may be, does not require immediate use of that land and accordingly lets it.
It is the tenant who has taken that land with whom we are dealing in this case. The Bill as drawn provides that there should be liberty to the landlord to resume possession at a specified date, upon getting a certificate. The point was raised by noble Lords that the tenant should have some opportunity of making objection to the granting by the Minister of that certificate. A number of suggestions were made. In the Amendment which I beg to move, we have made provision for that, and we have made provision to meet it in the variety of different circumstances that may arise, which makes the clause extremely complicated. A large number of Amendments are involved. I have had the clause, as amended by all these Amendments, incorporated into one whole. I understand that the noble Lord, Lord Silkin, has had an opportunity of considering it from that aspect, and I hope that he will be satisfied that we have given effect to the suggestion he made.
In a few words I will give the results of the Amendment, and what is the pro-
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cedure which will be adopted in the cases which fall under Clause 57. In a few simple words, the procedure will be this—and let me remind your Lordships that it may be either that the Government Department or the local authority or statutory undertaker want to give notice to the tenant, and in any case a certificate has to be given: when the giving of a certificate is under consideration, whether because a local authority or a statutory undertaker have applied for a certificate, or because a Department requires possession of premises which they themselves have let, the tenant will be notified and will have twenty-one days in which to make representations. I think twenty-one days is ample time for this; it is taken from the Acquisition of Land (Authorisation Procedure) Act, 1946. Then the Minister is required to consider the representations before deciding whether to give the certificate. If a certificate is given, the Department or local authority send a copy of it to the tenant when they give him notice under the Bill to terminate the tenancy. If the tenant himself takes the initiative, as he may under Clause 26, by making a request under that clause for a new tenancy at a time when no certificate has been given, then the position is as follows. If, within two months of the tenant's request, he is given notice that the giving of a certificate is under consideration, his request is of no avail for the time being but it can be renewed after the Minister has reached his decision. I think that covers in a few words almost all the cases, which are elaborate, and I think with necessary elaboration provided for by the Amendments standing in my name to Clause 57. It would perhaps be convenient if I formally moved Amendment No. 21 and put the others, which are not strictly consequential, later. I beg to move.
Amendment moved—
Page 42, line 1, leave out from ("corporation") to ("then") in line 6 and insert the said new words and subsections.—(The Lord Chancellor.)
LORD SILKIN: My Lords, may I again express my pleasure that Her Majesty's Government have seen fit radically to amend the various provisions relating to the issue of a certificate by a Department. Here again, it is a substantial act of justice to a tenant that he

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should be able to make representations to the Minister where a certificate has been applied for. The position is, of necessity, complicated, but it is satisfactory except, I believe, in one respect. Can the noble and learned Lord say whether it is possible, under these Amendments, or under the Bill as it originally stood, for possession to be obtained against a tenant earlier than the date of termination, where the property is held by a local authority or Government Department? As the clause will read, it seems to indicate that a notice may specify an earlier date as the date of termination.
THE LORD CHANCELLOR: I think it would not prejudice the tenant's right to continue possession; I do not think there can possibly be possession before the date of termination under this clause. It is a question of giving six months' notice.
LORD SILKIN: I do not want to take up the time of your Lordships' House on this matter, but if the noble and learned Lord will look at Clause 57 (3) (b) he will see the point. The noble and learned Lord has another opportunity to look at this. But I should hate to think that, as a result of my intervention, it had been made possible for a Department to get possession earlier than the date of termination of the tenancy. Perhaps the noble and learned Lord will look at that.
THE LORD CHANCELLOR: I will indeed.
On Question, Amendment agreed to.
THE LORD CHANCELLOR: I beg to move Amendments Nos. 22, 23, 24, 25, 26, 27, 28, 29, 30 and 31.
Amendments moved—
Page 42, line 21, leave out from beginning to ("and") in line 23 and insert—
("(4) Where a tenant makes a request for a new tenancy under section twenty-six of this Act, and the interest of the landlord or any superior landlord in the property comprised in the current tenancy belongs or is held as mentioned in subsection (1) of this section, the following provisions shall have effect:
(a) if a certificate has been given under the said subsection (1) in relation to the current tenancy,")
Page 42, line 37, at end insert—
("(b) if no such certificate has been given but notice under subsection (2) of this section has been given before the making of the request or within two months thereafter, the request shall not have effect, without prejudice
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however to the making of a new request when the Minister or Board has determined whether to give a certificate.")
Page 42, line 38, leave out ("the court makes an order") and insert ("application is made to the court")
Page 42, line 41, leave out ("then if")
Page 42, line 43, leave out ("certifies") and insert ("may certify")
Page 42, line 43, leave out from ("interest'') to ("determine") in line 44 and insert ("that if the landlord makes an application in that behalf the court shall")
Page 42, line 46, leave out from ("land-lord") to end of line 47 and insert—
("Subsection (2) of this section shall apply in relation to a certificate under this subsection, and it notice under the said subsection (2) has been given to the tenant—

(a) the court shall not determine the application for the grant of a new tenancy until the Minister or Board has determined whether to give a certificate,

(b) if a certificate is given, the court shall on the application of the landlord determine as a term of the new tenancy that it shall be terminable as aforesaid, and section twenty-five of this Act shall apply accordingly.")

Page 43, line 10, leave out ("and the Minister of Works certifies") and insert ("the Minister of Works may certify")
Page 43, line 14, leave out from ("changed") to end of line 16 and insert—
("and subsections (2) to (4) of this section shall apply in relation to certificates under this subsection, and to cases where the interest of the landlord or any superior landlord belongs to the National Trust, as those subsections apply in relation to certificates under subsection (1) of this section and to cases where the interest of the landlord or any superior landlord belongs or it held as mentioned in that subsection.")
Clause 58
Page 44, line 28, after ("tenancy") insert ("or a part thereof").—(The Lord Chancellor.)
On Question, Amendments agreed to.
Second Schedule [Further provisions as to repair where tenant retains possession]:
THE LORD CHANCELLOR: My Lords, I beg to move this Amendment.
Amendment moved—
Page 57, line 30, at end insert—
"Failure of tenant to carry out initial repairs
4. Where, by virtue of an agreement or of a determination of the court, the tenant is required to carry out initial repairs to the dwelling-house, failure by the tenant to carry out the repairs within a reasonable time in accordance with the agreement or determination shall be treated as a breach of the obligations of the tenancy for the purposes of paragraph (a) of the First Schedule to the Act

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of 1933 (which relates to recovery of possession where the rent has not been paid or any other obligation of the tenancy has not been performed)."—(The Lord Chancellor.)
LORD SILKIN: My Lords, this is a rather substantial Amendment which flows, of course, from the concessions which the Government have made on the question of tenants' repairs. The noble and learned Lord explained that, where a tenant had undertaken to do, or had requested to do, his own repairs, and the court had made an order (or even where the court had not made an order but where there was an agreement to that effect), if the tenant was in breach of that agreement then the landlord had a right to claim possession in respect of the breach. Can the noble and learned Lord say whether the tenant would still have the right to claim relief in respect of this breach, as he would have had under the Law of Property Act in respect of a similar breach under his original lease? He ought not to be deprived of his right to get relief. He may have undertaken to do the repairs in good faith, just as a landlord might get possession of his premises on the ground that he wanted to redevelop them, but then finds—perhaps misfortune overtakes him —that he cannot do it. Would he, in such a case have the right to apply for relief?
THE LORD CHANCELLOR: As I read the Bill—and I speak subject to correction—the landlord's right to possession in these circumstances is not automatic. It is subject to the court's being satisfied that grant of a possession order is reasonable under Section 3, subsection (1) of the Rent Act, 1933.
On Question, Amendment agreed to.
THE LORD CHANCELLOR: I beg to move Amendments Nos. 33, 34 and 35, all of which are consequential upon the first Amendment.
Amendments moved—
Page 58, line 20, leave out ("by the landlord")
Page 58, line 24, leave out sub-paragraph (2).
Fifth Schedule
Page 64, line 37, leave out ("or tenant's initial repairs").—(The Lord Chancellor.)
On Question, Amendments agreed to.

HIRE-PURCHASE BILL
Read 3a (according to Order), with the Amendments, and passed, and returned to the Commons.
PHARMACY BILL [H.L.]
Read 3a (according to Order), and passed, and sent to the Commons.
TRUSTEE SAVINGS BANKS BILL [H.L.]
Amendments reported (according to Order).
POST OFFICE SAVINGS BANK BILL [H.L.]
An Amendment reported (according to Order).
SLAUGHTER OF ANIMALS (AMENDMENT) BILL
Amendments reported (according to Order).

WESLEYAN AND GENERAL ASSURANCE SOCIETY BILL
Returned from the Commons with the Amendments agreed to.
House adjourned at twenty minutes before five o'clock.